With updated weather models once again appearing to back off somewhat on the intensity of upcoming cold, natural gas futures were trading slightly lower early Friday. The March Nymex contract was down 0.9 cents to $1.817/MMBtu at around 8:40 a.m. ET.
Both the American and European datasets shed heating demand from their respective forecasts overnight, according to NatGasWeather.
“The data still shows two solid cold shots into the U.S. the next eight days, just not quite as cold with the one during the second half of next week and with breaks before and after being milder,” the forecaster said. “The data is still colder than it was at the start of the week, but the natural gas markets could be disappointed if weather patterns this winter keep finding a way to trend milder in time, as they did once again overnight.
“Whether this sticks will be the focus of today’s midday update ahead of the long Presidents Day holiday weekend. Even with milder overnight trends, there will still be nice swings in demand; it’s just milder breaks between cold shots prevent the pattern from looking more ominous.”
Meanwhile, the Energy Information Administration (EIA) on Thursday reported a 115 Bcf withdrawal from storage for the week ending Feb. 7, to the bullish side of consensus estimates. The reported draw compares with last year’s 101 Bcf withdrawal for the similar week and a five-year average draw of 131 Bcf. Total working gas in underground storage stood at 2,494 Bcf as of Feb. 7, 601 Bcf (31.7%) higher than year-ago stocks and 215 Bcf (9.4%) higher than the five-year average, according to EIA.
“Continued strong power burn is proving insufficient to prevent” a continued increase in the inventory surplus over the five-year average, analysts at Tudor, Pickering, Holt & Co. (TPH) said of this week’s EIA report. “...We’re expecting it to tick another percent higher next week, with our early modeling pointing to a 134 Bcf draw.
“Despite a material uptick in residential/commercial demand for the current week (next week’s report), it is being partially offset by reduced feed gas demand” from liquefied natural gas (LNG) export terminals and gains in imports from Canada, the analysts said. “On the LNG side, Sabine Pass and Cameron are showing materially lower demand week/week, dropping total U.S. LNG utilization to 94% for the week from 104% the prior week.”
March crude oil futures were up 66 cents to $52.08/bbl at around 8:40 a.m. ET, while March RBOB gasoline was trading fractionally higher at $1.5847/gal.